Custom, Excise & Service Tax Tribunal
Jaydeep Cotton Fibres Pvt Ltd vs Rajkot on 14 August, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST ZONAL BENCH : AHMEDABAD
REGIONAL BENCH - COURT NO. 3
SERVICE TAX Appeal No. 13146 of 2013-DB
[Arising out of Order-in-Original/Appeal No 31-COMMR-2013 dated 08.03.2013 passed by
Commissioner of Service Tax-RAJKOT]
Jaydeep Cotton Fibres Pvt Limited .... Appellant
C-805, Imperial Hights, Opp Big Bazar
150 ft Ring Road, RAJKOT, GUJARAT
VERSUS
Commissioner of Central Excise & ST, Rajkot .... Respondent
Central Excise Bhavan, Race Course Ring Road Income Tax Office, Rajkot, Gujarat-360001 APPEARANCE :
Shri Darshan Ranavat, Chartered Accountant for the Appellant Shri P.K. Singh, Superintendent (AR) for the Respondent CORAM: HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE MR. C.L. MAHAR, MEMBER (TECHNICAL) DATE OF HEARING : 14.02.2023 DATE OF DECISION: 14.08.2023 FINAL ORDER NO. 11738/2023 C.L. MAHAR :
The brief facts of the matter are that the show cause notice dated 14.10.2011 was issued to the appellant on following three grounds:-
(i) That the appellant were registered with the Service Tax department under the category of Goods Transport Agency service and they have been receiving GTA Service since January 2005 onwards and as per the provisions of Service Tax law, the appellant was liable to pay service tax on the Goods Transport Agency service being recipient of service as per Rule 2(d)(i)(v) of Service Tax Rules, 1994.
The department has demanded service tax of Rs. 28,79,069/- under the Goods Transport Agency service along with interest from the appellant.
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(ii) The second issue on which the impugned show cause notice has been issued for payment of service tax on commission/ brokerage paid for export of goods to a person of foreign country other than India. It has been contention of the department that appellant being the recipient of service from abroad in India, they were required to pay service tax under the category of Business Auxiliary Service under Rule 2(d)(i)(iv) of Service Tax Rules, 1994 read with Section 66A of the Finance Act, 1994. The service tax of Rs. 81,41,705/- was demanded for the period April 2006 to March 2011 on reverse charge basis denying them the benefit of Notification No. 13/2003-ST dated 20.06.2003.
(iii) The third issue on which the demand has been raised by the Revenue is that the appellant were engaged in processing of cotton bales and no taxable activity under the Service Tax Act or under the Central Excise Act was carried out by the appellant and thus, they have neither provided any taxable output service as required under Rule 3 of Cenvat Credit Rules, 2004 nor have done any excisable activity and therefore, Cenvat credit availed by the appellant of Rs. 38,77,507/- was not available to them and same has been demanded under Rule 14 of Cenvat Credit Rules, 2004.
2 The impugned show cause notice has been adjudicated by the impugned order-in-original dated 11.03.2013 whereunder the learned Adjudicating Authority has confirmed the demand on GTA Service amounting to Rs. 16,89,073/-. The learned Adjudicating Authority has also confirmed the recovery of wrongly availed Cenvat credit of Rs. 38,77,507/- under Rule 14 of Cenvat Credit Rules, 2004. Penal provisions under Rule 15 has been invoked in case of denial of Cenvat credit of Rs. 38,77,507/- and penalties 3 Appeal No. ST/13146/2013-DB under Section 78 and 76 has also been confirmed so far as demand of Rs. 16,89,073/- is concerned. The demand of service tax amounting to Rs. 81,41,705/- on Business Auxiliary Service under reverse charge basis has been dropped by the learned Commissioner.
3. The department has filed appeal against dropping of demand against Business Auxiliary Service amounting to Rs. 81,41,705/- vide Service Tax Appeal No. 12097 of 2013-DB and the matter has already been decided by this bench and issue has been referred to Larger Bench for decision vide Interim Order No. 12/2023 dated 14.06.2023.
4. The appellant are before us against the denial of Cenvat credit amounting to Rs. 38,77,507/- and so far as the demand of Rs. 16,89,073/-, under the category of Goods Transport Agency service. The appellant is only contesting the imposition of penalty under Section 76 and 78 of Finance Act, 1994, so far as demand of service tax amount of Rs. 16,89,073 on GTA service is concerned.
5. We have heard both the sides.
6. It is matter of record that so far as the demand of Rs. 16,89,073/- under the category of Goods Transport Agency service is concerned, the appellant have deposited the entire amount of service tax along with interest during the course of enquiry itself. The demand of service tax under GTA has not been contested by the appellant however, the penalties imposed under Section 76 and 78 of the Finance Act, 1994 are being agitated by the appellant. We take note of the fact that appellant have voluntarily paid the short paid service tax under GTA service. Learned Counsel for the appellant submitted that they themselves have come forward and informed the 4 Appeal No. ST/13146/2013-DB department that they have paid short payment of service tax under GTA vide their letter dated 06.06.2011. We find that the Adjudicating Authority has failed to take note of two facts firstly, that appellants themselves have come forward and informed the department regarding the short payment of service tax and secondly, they deposited the short paid service tax under the category of Goods Transport Agency service on their own along with interest leviable thereon.
7. We find that these two facts are very relevant for imposition of penalty under Section 78 and 76 of the Finance Act, 1994. We are of the view that the matter needs to be remanded for fresh adjudication for the purpose of penalties after taking due cognizance of the fact with regard to the information supplied by the appellant and the amount of service tax short paid by them during the course of enquiry.
7. As regards the wrong availment of Cenvat credit amounting to Rs. 38,77,507/- during the period April 2006 to September 2010 is concerned, we find that before proceeding further it will be appropriate to have a look of Rule 3 of Cenvat Credit Rules, 2004:-
"RULE 3. CENVAT credit. -- (1) A manufacturer or producer of final products or a [provider of output service] shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of -
(i) the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act :
[Provided that CENVAT credit of such duty of excise shall not be allowed to be taken when paid on any goods -
(a) in respect of which the benefit of an exemption under Notification No. 1/2011-C.E., dated the 1st March, 2011 is availed; or
(b) specified in serial numbers 67 and 128 in respect of which the benefit of an exemption under Notification No. 12/2012-C.E., dated the 17th March, 2012 is availed;]
(ii) the duty of excise specified in the Second Schedule to the Excise Tariff Act, leviable under the Excise Act;5
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(iii) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978);
(iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957);
(v) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001);
(vi) the Education Cess on excisable goods leviable under section 91 read with section 93 of the Finance (No. 2) Act, 2004 (23 of 2004); [(via) the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007);]
(vii) the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii), (iii), (iv), (v) [, (vi) and (via)]:
[* * *] [(viia) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act [ * * * ] :
Provided that a provider of [output] service shall not be eligible to take credit of such additional duty;]
(viii) the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003);
(ix) the service tax leviable under section 66 of the Finance Act; [* * *] [(ixa) the service tax leviable under section 66A of the Finance Act;] [(ixb) the service tax leviable under section 66B of the Finance Act;]
(x) the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance (No. 2) Act, 2004 (23 of 2004);
[(xa) the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and] [(xi) the additional duty of excise leviable under [section 85 of Finance Act, 2005 (18 of 2005),]] : paid on -
(i) any input or capital goods received in the factory of manufacture of final product or [by] the provider of output service on or after the 10th day of September, 2004; and
(ii) any input service received by the manufacturer of final product or by the provider of output services on or after the 10th day of September, 2004, including the said duties, or tax, or cess paid on any input or input service, as the case may be, used in the manufacture of intermediate products, by a job-worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 214/86-Central Excise, dated the 25th March, 1986, published in the Gazette of India vide number G.S.R. 547(E), dated the 6 Appeal No. ST/13146/2013-DB 25th March, 1986, and received by the manufacturer for use in, or in relation to, the manufacture of final product, on or after the 10th day of September, 2004 :
[Provided that the CENVAT credit shall be allowed to be taken of the amount equal to central excise duty paid on the capital goods at the time of debonding of the unit in terms of the para 8 of Notification No. 22/2003-Central Excise, published in the Gazette of India, part II, Section 3, sub-section (i), vide number G.S.R. 265(E), dated, the 31st March, 2003.] Explanation. - For the removal of doubts it is clarified that the manufacturer of the final products and the provider of output service shall be allowed CENVAT credit of additional duty leviable under section 3 of the Customs Tariff Act on goods falling under heading 9801 of the First Schedule to the Customs Tariff Act.
[(1a) A provider of output service shall be allowed to take CENVAT credit of the Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016 (28 of 2016)].
(2) Notwithstanding anything contained in sub-rule (1), the manufacturer or producer of final products shall be allowed to take CENVAT credit of the duty paid on inputs lying in stock or in process or inputs contained in the final products lying in stock on the date on which any goods manufactured by the said manufacturer or producer cease to be exempted goods or any goods become excisable.
(3) Notwithstanding anything contained in sub-rule (1), in relation to a service which ceases to be an exempted service, the provider of the output service shall be allowed to take CENVAT credit of the duty paid on the inputs received on and after the 10th day of September, 2004 and lying in stock on the date on which any service ceases to be an exempted service and used for providing such service.
(4) The CENVAT credit may be utilized for payment of -
(a) any duty of excise on any final product; or (b) an amount equal to CENVAT credit taken on inputs if such inputs are removed as such or after being partially processed; or (c) an amount equal to the CENVAT credit taken on capital goods if such capital goods are removed as such; or (d) an amount under sub-rule (2) of rule 16 of Central Excise Rules, 2002; or (e) service tax on any output service :
Provided that while paying duty of excise or service tax, as the case may be, the CENVAT credit shall be utilized only to the extent such credit is available on the last day of the month or quarter, as the case may be, for payment of duty or tax relating to that month or the quarter, as the case may be :
[Provided further that CENVAT credit shall not be utilised for payment of any duty of excise on goods in respect of which the benefit of an exemption under Notification No. 1/2011-C.E., dated the 1st March, 2011 is availed :] Provided [also] that the CENVAT credit of the duty, or service tax, paid on the inputs, or input services, used in the manufacture of final products cleared after availing of the exemption under the following notifications of Government of India in the Ministry of Finance (Department of Revenue), -7
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(i) No. 32/99-Central Excise, dated the 8th July, 1999 [G.S.R. 508(E), dated 8th July, 1999];
(ii) No. 33/99-Central Excise, dated the 8th July, 1999 [G.S.R. 509(E), dated 8th July, 1999];
(iii) No. 39/2001-Central Excise, dated the 31st July, 2001 [G.S.R. 565(E), dated the 31st July, 2001];
(iv) No. 56/2002-Central Excise, dated the 14th November, 2002 [G.S.R. 764(E), dated the 14th November, 2002];
(v) No. 57/2002-Central Excise, dated 14th November, 2002 [G.S.R. 765(E), dated the 14th November, 2002];
(vi) No. 56/2003-Central Excise, dated the 25th June, 2003 [G.S.R. 513(E), dated the 25th June, 2003]; and
(vii) No. 71/2003-Central Excise, dated the 9th September, 2003 [G.S.R. 717(E), dated the 9th September, 2003], shall, respectively, be utilized only for payment of duty on final products, in respect of which exemption under the said respective notifications is availed of :
[Provided also that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, [ * * * ] shall be utilised for payment of service tax on any output service :
[Provided also that the CENVAT credit of any duty specified in sub-rule (1), except the National Calamity Contingent duty in item (v) thereof, shall not be utilized for payment of the [National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001) :]] [Provided also that the CENVAT credit of any duty specified in sub-rule (1) shall not be utilized for payment of the Clean Energy Cess leviable under section 83 of the Finance Act, 2010 (14 of 2010) :] [Provided also that the CENVAT credit of any duty specified in sub-rule (1) shall not be utilised for payment of the Swachh Bharat Cess leviable under sub-section (2) of section 119 of the Finance Act, 2015 (20 of 2015) :] Provided also that the CENVAT credit of any duty mentioned in sub-rule (1), other than credit of additional duty of excise leviable under [section 85 of Finance Act, 2005 (18 of 2005)], shall not be utilised for payment of said additional duty of excise on final products :] [Provided also that CENVAT credit shall not be utilised for payment of Infrastructure Cess leviable under [sub-section (1) of section 162 of the Finance Act, 2016 :]] [Provided also that the Cenvat credit of any duty specified in sub-rule (1) shall not be utilised for payment of Krishi Kalyan Cess leviable under section 161 of the Finance Act, 2016 (28 of 2016);] [Explanation. - CENVAT credit cannot be used for payment of service tax in respect of services where the person liable to pay tax is the service recipient.] 8 Appeal No. ST/13146/2013-DB (5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9 :
Provided that such payment shall not be required to be made where any inputs [or capital goods] are removed outside the premises of the provider of output service for providing the output service :
[* * *] [Provided further that such payment shall not be required to be made where any inputs are removed outside the factory for providing free warranty for final products :] [* * * * * *] [(5A) (a) If the capital goods, on which CENVAT credit has been taken, are removed after being used, the manufacturer or provider of output services shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter of a year or part thereof from the date of taking the CENVAT Credit, namely :-
(i) for computers and computer peripherals :
for each quarter in the first year @ 10% for each quarter in the second year @ 8% for each quarter in the third year @ 5% for each quarter in the fourth and fifth year @ 1%
(ii) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter :
Provided that if the amount so calculated is less than the amount equal to the duty leviable on transaction value, the amount to be paid shall be equal to the duty leviable on transaction value.
(b) If the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on transaction value.] [(5B) If the value of any,
(i) input, or
(ii) capital goods before being put to use, [on which CENVAT credit has been taken is written off fully or partially or where any provision to write off fully or partially has been made in the books of account then] the manufacturer or service provider, as the case may be, shall pay an amount equivalent to the CENVAT credit taken in respect of the said input or capital goods :
Provided that if the said input or capital goods is subsequently used in the manufacture of final products or the provision of [output] services, the manufacturer or output service provider, as the case may be, shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier subject to the other provisions of these rules.] 9 Appeal No. ST/13146/2013-DB [* * * * * *] [(5C) Where on any goods manufactured or produced by an assessee, the payment of duty is ordered to be remitted under rule 21 of the Central Excise Rules, 2002, the CENVAT credit taken on the inputs used in the manufacture or production of said goods [and the CENVAT credit taken on input services used in or in relation to the manufacture or production of said goods] shall be reversed.] [Explanation 1. - The amount payable under sub-rules (5), (5A), (5B) and (5C), unless specified otherwise, shall be paid by the manufacturer of goods or the provider of output service by debiting the CENVAT credit or otherwise on or before the 5th day of the following month except for the month of March, where such payment shall be made on or before the 31st day of the month of March.
Explanation 2. - If the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rules (5), (5A), (5B) and (5C), it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken and utilised.] (6) The amount paid under [sub-rule (5) and sub-rule (5A)] shall be eligible as CENVAT credit as if it was a duty paid by the person who removed such goods under [sub-rule (5) and sub-rule (5A)].
(7) Notwithstanding anything contained in sub-rule (1) [, sub-rule (1a)] and sub-rule (4), -
(a) CENVAT credit in respect of inputs or capital goods produced or manufactured, by a hundred per cent. export-oriented undertaking or by a unit in an Electronic Hardware Technology Park or in a Software Technology Park other than a unit which pays excise duty levied under section 3 of the Excise Act read with serial numbers 3, 5, 6 and 7 of Notification No. 23/2003-Central Excise, dated the 31st March, 2003 [G.S.R. 266(E), dated the 31st March, 2003] and used in the manufacture of the final products or in providing an output service, in any other place in India, in case the unit pays excise duty under section 3 of the Excise Act read with serial number 2 of the Notification No. 23/2003-Central Excise, dated the 31st March, 2003 [G.S.R. 266(E), dated the 31st March, 2003], shall be admissible equivalent to the amount calculated in the following manner, namely :-
Fifty per cent. of [X multiplied by {(1+BCD/100) multiplied by (CVD/100)}], where BCD and CVD denote ad valorem rates, in per cent. of basic customs duty and additional duty of customs leviable on the inputs or the capital goods respectively and X denotes the assessable value :
[Provided that the CENVAT credit in respect of inputs and capital goods cleared on or after 1st March, 2006 from an export oriented undertaking or by a unit in Electronic Hardware Technology Park or in a Software Technology Park, as the case may be, on which such unit pays excise duty under section 3 of the Excise Act read with serial number 2 of the Notification No. 23/2003-Central Excise, dated 31st March, 2003 [G.S.R. 266(E), dated the 31st March, 2003] shall be equal to [X multiplied by [(1+BCD/200) multiplied by (CVD/100)]] :
[Provided further that the CENVAT credit in respect of inputs and capital goods cleared on or after the 7th September, 2009 from an export-oriented undertaking or by a unit in Electronic Hardware Technology Park or in a Software Technology Park, as the case may be, on which such undertaking or unit has paid -10
Appeal No. ST/13146/2013-DB (A) excise duty leviable under section 3 of the Excise Act read with serial number 2 of the Notification No. 23/2003-Central Excise, dated 31st March, 2003 [G.S.R. 266(E), dated the 31st March, 2003]; and (B) the Education Cess leviable under section 91 read with section 93 of the Finance (No. 2) Act, 2004 and the Secondary and Higher Education Cess leviable under section 136 read with section 138 of the Finance Act, 2007, on the excise duty referred to in (A), shall be the aggregate of -
(I) that portion of excise duty referred to in (A), as is equivalent to -
(i) the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, which is equal to the duty of excise under clause (a) of sub-section (1) of section 3 of the Excise Act;
(ii) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act; and (II) the Education Cess and the Secondary and Higher Education Cess referred to in (B).] [(b) CENVAT credit in respect of -
(i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978);
(ii) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001);
(iii) the education cess on excisable goods leviable under section 91 read with section 93 of the Finance (No. 2) Act, 2004 (23 of 2004); [(iiia) the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007);]
(iv) the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under items (i), (ii) and (iii) above;
(v) the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003);
(vi) the education cess on taxable services leviable under section 91 read with section 95 of the Finance (No. 2) Act, 2004 (23 of 2004); [(via) the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and]
(vii) the additional duty of excise leviable under [section 85 of the Finance Act, 2005 (18 of 2005)], [shall be utilised towards payment of duty of excise or as the case may be, of service tax leviable under the said Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 or the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001), or the education cess on excisable goods leviable under section 91 read with section 93 of the said Finance (No. 2) Act, 2004 (23 of 2004), or the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007) or the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003), or the education cess on taxable services leviable under section 91 read with section 95 of the said 11 Appeal No. ST/13146/2013-DB Finance (No. 2) Act, 2004 (23 of 2004), or the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007), or the additional duty of excise leviable under section 85 of the Finance Act, 2005 (18 of 2005) respectively, on any final products manufactured by the manufacturer or for payment of such duty on inputs themselves, if such inputs are removed as such or after being partially processed or on any output service :] [Provided that the credit of the education cess on excisable goods and the education cess on taxable services can be utilized, either for payment of the education cess on excisable goods or for the payment of the education cess on taxable services :
Provided further that the credit of the Secondary and Higher Education Cess on excisable goods and the Secondary and Higher Education Cess on taxable services can be utilized, either for payment of the Secondary and Higher Education Cess on excisable goods or for the payment of the Secondary and Higher Education Cess on taxable services :] [Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on inputs or capital goods received in the factory of manufacture of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise leviable under the First Schedule to the Excise Tariff Act :
Provided also that the credit of balance fifty per cent. Education Cess and Secondary and Higher Education Cess paid on capital goods received in the factory of manufacture of final product in the financial year 2014-15 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act :
Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on input services received by the manufacturer of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act :] [Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on inputs or capital goods received in the premises of the provider of output service on or after the 1st day of June, 2015 can be utilized for payment of service tax on any output service :
Provided also that the credit of balance fifty per cent. Education Cess and Secondary and Higher Education Cess paid on capital goods received in the premises of the provider of output service in the financial year 2014-15 can be utilized for payment of service tax on any output service :
Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on input service in respect of which the invoice, bill, challan or Service Tax Certificate for Transportation of Goods by Rail (referred to in rule 9), as the case may be, is received by the provider of output service on or after the 1st day of June, 2015 can be utilized for payment of service tax on any output service.] Explanation. - For the removal of doubts, it is hereby declared that the credit of the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) paid on or after the 1st day of April, 2000, may be utilised towards payment of duty of excise leviable under the First Schedule or the Second Schedule to the Excise Tariff Act.]
(c) the CENVAT credit, in respect of additional duty leviable under section 3 of the Customs Tariff Act, paid on marble slabs or tiles falling under [tariff items 2515 12 20 12 Appeal No. ST/13146/2013-DB and 2515 12 90 respectively] of the First Schedule to the Excise Tariff Act shall be allowed to the extent of thirty rupees per square metre;
[(d) Cenvat credit in respect of Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016 (28 of 2016) shall be utilised only towards payment of Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016 (28 of 2016)].
Explanation. - Where the provisions of any other rule or notification provide for grant of whole or part exemption on condition of non-availability of credit of duty paid on any input or capital goods, or of service tax paid on input service, the provisions of such other rule or notification shall prevail over the provisions of these rules." It can be seen from the above provisions of the Rule 3 of Cenvat Credit Rules, 2004 that a manufacturer or producer of final products or a provider of output service is entitled to take credit of Cenvat credit of the duties paid by them on inputs or input service including the capital goods if the final product manufactured/ produced by them or output service provided by them is leviable to duty.
8. It is a matter of record that that the appellant is engaged in processing of cotton bails which is neither manufacturing activity falling within the ambit of Central Excise law nor the output service falling under the provisions of Finance Act, 1994. We feel that appellant has wrongly availed and utilized Cenvat credit of Rs. 38,77,507/- during the period from April 2006 to September 2010. We do not find any legal shortcoming in the order-in- original with regard to confirmation of demand under the provisions of Rule 14 as well as Rule 15 of Cenvat Credit Rules, 2004.
9. In view of our above discussion, we hold that so far as invoking penal provisions under Section 76 and 78 of Finance Act, 1994 with regard to short payment of service tax on Goods Transport Agency service is concerned, we remand back the matter to the Adjudicating Authority for fresh adjudication as observed in the preceding paragraphs. So far as the denial of Cenvat 13 Appeal No. ST/13146/2013-DB credit of Rs. 38,77,507/- is concerned, we uphold the impugned order-in- original in this regard.
10. The appeal is disposed in following manner:-
(a) So far as the imposition of the penalty under Section 76 and 78 for non-payment of service tax under GTA is concerned, the matter is remanded back to the Original Adjudicating Authority for fresh adjudication considering the submission made by the appellant in this matter.
(b) We dismiss the appeal with regard to availment of the Cenvat Credit of Rs. 38,77,507/- in view of the above discussion.
(Pronounced in the open court on 14.08.2023) (Ramesh Nair) Member (Judicial) (C L Mahar) Member (Technical) KL